Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
My husband and I are in disagreement on how much to spend on a home. I think we should spend under 250K, maybe even 150-180K.
He would like to spend up to 350K.
We saw a house that we both really liked. But the list price is 330K. If we can get the house at max 315K, then our monthly payment (PITI) will be around $2100. I feel this is out of my comfort zone.
After taxes I make $3400 and my husband makes $4400 after taxes.
I'm a first time home buyer and I'm a bit scared of spending that much especially if one of us loses our job.
But my husband won't budge on price...
What do you guys think of a 2100/month payment based on our salaries. (Oh also we have no debt or car payments).
We saw a house that we both really liked. But the list price is 330K. If we can get the house at max 315K, then our monthly payment (PITI) will be around $2100. I feel this is out of my comfort zone.
After taxes I make $3400 and my husband makes $4400 after taxes.
What do you guys think of a 2100/month payment based on our salaries. (Oh also we have no debt or car payments).
You're saying you have a combined income after taxes of $7,800/mo?
Do you have money for a down payment?
I appreciate your unease, as it is a long term commitment. However, unless you have unusually high medical expenses or extravagant hobbies, or like to eat out in fancy restaurants every day of the week, etc., I see no reason why monthly PITI of $2,100 would be too high, especially since you state you have no debt.
You should have plenty left over to put money aside for an emergency fund (!) and for your retirement...
Good luck with the house hunting, no matter what you decide!
Do you have an 8 month emergency fund? How much are you putting down? Will you have to pay PMI? How much are the taxes and home insurance? Do you plan to stay in this house for a long time? Would you be moving to another town in a few years?
The general rule is not to use more than 25% of your before tax income. But the more expensive house is almost at 25% of your after tax income so you are well within what is considered "safe".
Just to note, if you buy a house for $320,000 you'll get an additional tax deduction of around $11,000 (Your itemized deduction should be at least $22,000 or so where as currently you just get the standard deduction of around $11,000). That should free up a good $3,000 a year that you'd otherwise give uncle Sam/your state.
You can ease your mind about the job loss by having an emergency fund. Buying without a decent emergency fund is not a particularly good idea. But with an emergency fund you are not even close to overextending yourself.
The big house has the potential to lose a lot more money for you if RE prices keep going down, but it also has the potential to make you more money if they rise suddenly. Prices for small houses aren't as volatile, and if we keep having hard times it will be a lot easier for you to sell an cheaper house than a more expensive one.
You can avoid a ton of interest payments if you go with the cheaper house and a shorter loan. If you assume that you can afford a 300K house with a 30 year loan, and make that same payment toward a 150K house, you can pay it off in 5 years. After it's paid off you can repeat the process and borrow another 150K to buy your dream house, and again you'll pay it off in 5 years. You'll save 20 years worth of mortgage payments, and all it will cost you is five years of living in the more expensive house.
I had planned on doing exactly what I described above, but after the first mortgage was paid off I realized that I didn't need or want the bigger house. I'm happy living in a small house with small taxes, small utility bills, no debt, and a big bank account. When it's time to sell this place and move on I may decide to get something a little bigger, but I won't be taking out a loan to do it.
Interest rates on mortgages have nowhere to go but up. They have maybe a half a point on the downside, and it wouldn't surprise me to see ten points to the upside.
What this means to you is that the more expensive house you're thinking about will become even less affordable to other people when interest rates go back up to their norm. When this happens, cheaper homes will be in higher demand, and more expensive homes will continue to lose value.
If you lock in a cheap rate on an expensive house, your equity losses due to the higher interest rates could offset your gains, but if you lock in a cheap rate on an inexpensive house, there's a good chance you could gain some equity and have a low interest rate.
The big house has the potential to lose a lot more money for you if RE prices keep going down, but it also has the potential to make you more money if they rise suddenly. Prices for small houses aren't as volatile, and if we keep having hard times it will be a lot easier for you to sell an cheaper house than a more expensive one.
You bring up some good points, but the OP isn't looking at this home as an investment. She said that she and her husband plan to settle down here. I agree with a lot of what you're saying, but the perspective of the buyer doesn't always make this a factor. We (or at least I) also don't know where the OP is buying. $320k in the Midwest is a lot different than $320k in many parts of the East and West Coasts.
We (or at least I) also don't know where the OP is buying. $320k in the Midwest is a lot different than $320k in many parts of the East and West Coasts.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
